Sachin invests ₹8500 in 10%, ₹100 shares at ₹170

Commercial Mathematics (10)

Sachin invests ₹8500 in 10%, ₹100 shares at ₹170. He sells the shares when the price of each share rises by ₹30. He invests the proceeds in 12% ₹100 shares at ₹125. Find:

1. the sale proceeds.
2. the number of ₹125 shares he buys.
3. the change in his annual income.

Answer

Number of shares = 8500/170 = 50

Dividend = (50 × 100 × 10)/100 = ₹500

(i) Sales proceeds = 50 × (170+30) = ₹10,000

(ii) New number of shares = 10,000/125 = 80

Dividend from new shares = (80 × 100 × 12)/100 = ₹960

∴ Change in income = 960 - 500 = ₹460